ETHTF (Core Strategy Rebalance)
Macro Has Been Winning the Battle
Last week, we advanced the idea that the recent decline in volatility might be traced to two competing forces: (1) positive industry-specific tailwinds and (2) negative macro headwinds. Additionally, the recent dip in macro correlations could be attributed to unique catalysts, notably the BlackRock ETF application.
Our thinking was that without further industry-specific catalysts, traditional macro correlations would likely return. As evidenced by the charts below, this appears to be the case, with a positively correlated relationship to equities and a negatively correlated relationship to the DXY returning, at least for now.
The recent weakness in prices is certainly disconcerting. Rates look like they do not have a ceiling (they will, eventually).
And the dollar, as the cleanest dirty shirt in the fiat laundry is exhibiting continued strength.
Further, global liquidity, as measured by the size of the balance sheets for the top 4 central banks (Fed, PBOC, BOJ, ECB) is down to levels last seen in mid-September of last year.
The Floodgates Open (Momentarily)
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